2021
Education & Enrollment Packet HSA Basics A health savings account (HSA) is a tax-advantaged checking account that gives you the ability to save for future medical expenses or pay current ones. It is individually owned; however, you may elect to designate an authorized signer who may also withdraw funds and be issued a debit card.
HSA Eligibility To be eligible to make deposits to an HSA, the account holder: • Must be currently enrolled in an HSA-qualified health plan • May not be enrolled in any other non-HSA qualified health plan • May not have, or be eligible to use, a general purpose flexible spending account (FSA) • Cannot be claimed as a dependent on another person’s tax return • May not be enrolled in Medicare, Medicaid or Tricare • Must not have used VA medical benefits in the past three months, with the exception of preventative services or treatment for a service-connected disability
Contributions to your HSA The annual maximum allowable contributions to an HSA, as established by the IRS, for 2021 are $3,600: Individual and $7,200: Family. Individuals 55 and older can make an additional catch-up contribution of $1,000 in 2021. A married couple can make two
catch-up contributions if both spouses are eligible. The spouses must deposit the catch-up contributions into separate accounts. The annual maximum contribution is based on a calendar year and there is no limit to the dollar balance that can build in the account over time. Contributions can come from: • Employee pre-tax payroll withholding • Employer contributions (non-taxable income) • Individual contributions from account owner or other individual (tax-deductible for account holder) • IRA or Roth IRA rollover
Distributions from your HSA • You, or an authorized signer, can make withdrawals (or distributions) for qualified expenses. • Distributions from your HSA can be made by check, debit card, ATM, online bill payment or by in-person request. • Distributions for qualified medical expenses are tax free. • Distributions made for anything other than qualified medical expenses are subject to IRS tax plus a 20% penalty. The penalty is waived if the account owner is 65 or older, or due to death or disability. • Qualified medical expenses for your spouse and your tax dependents may be paid from your HSA, even if those individuals are not covered under your high-deductible health plan (HDHP). • You’re responsible for keeping receipts for all distributions from your HSA. The bank does not monitor how the funds are spent.
Advantages of an HSA Portability
Tax Savings
You can take 100% of the deposited funds with you when you retire or change employers. You are the account owner.
Contributions are tax free (pre-tax through payroll deductions or tax deductible). Earnings are tax free. Funds withdrawn for eligible medical expenses are tax free.
Flexibility You can choose whether to spend the money on current medical expenses, or you can save your money for future use. Unused funds remain in the account from year to year and there is no “use it or lose it” provision.
Premium Savings An HSA-qualified insurance plan tends to be less expensive than a traditional insurance plan.